Manhattan Associates (MANH) Q2 FY26 earnings call: guidance and Q&A

How will AI agents contribute to revenue in H2/2027, and how will the new 'Editions' impact sales execution and potential disruption?

It's too early to provide specific revenue guidance for AI agents, but they are seen as material. The 'Editions' are well-received by the sales team, as they open new market segments (Enterprise and Essentials) without creating friction, by allowing the company to sell its Active platform to customers previously served by older products or those with simpler needs.

“Now this one is even easier. And the reason I say that is we're already selling to scale. We're already selling to this segment of the market. Now we get to sell our Premier product in that segment of the market.”

asked by Terrell Tillman · answered by Eric Clark

Will the new packaging cause sales disruption, and how did RPO bookings compare to internal expectations, including any early AI contribution?

No significant sales friction is expected from the new packaging, as it aligns with existing market efforts. RPO bookings were strong, driven by increased deal volume from prior investments, not pulled-ahead deals. AI has contributed to revenue and RPO, but it's too early to break out specific figures.

“When it comes to AI, clearly, AI has contributed some amount to revenue. It's contributed some amount to RPO. But again, because it's so early, we're not breaking that out.”

asked by Joseph Vruwink · answered by Eric Clark

How do you expect customers to migrate between the new 'Editions,' and how do maintenance renewals relate to the pace of cloud conversion?

Editions provide more optionality for cloud conversions; many on-prem customers are expected to move to the Enterprise Edition. Customers typically renew maintenance until they stop using the on-prem product. While conversion bookings were strong, they represent a small fraction of the total conversion base, indicating significant future opportunity.

“But the other thing to think about here is we had a really strong bookings quarter on conversions. It was 40% of our -- more than 40% of our bookings. But that was less than 2% of our conversion base, right?”

asked by Brian Peterson · answered by Eric Clark

How is the 1/3, 1/3, 1/3 bookings mix (new logo, conversions, expansions) evolving, and how will AI agent monetization impact subscription revenue, given immediate uplift?

In the first half, new logos still accounted for 40% of bookings, but conversions and expansions are strengthening, moving towards a more balanced mix without new logo decline. AI agents provide immediate revenue uplift upon conversion due to their 'day 1' deployment, but their overall contribution to subscription revenue is still small given the early stage of monetization.

“And as we've talked about before, unlike all of our other products, where they have to ramp as we deploy them, AI agents turn on, on day 1, and they are fully deployed.”

asked by Dylan Becker · answered by Eric Clark

Are customers becoming self-sufficient in building AI agents, and how will the restructuring activities impact the bottom line?

FTEs are involved in pilots to ensure customers find value and can become self-sufficient, with some customers already proficient in building agents. Restructuring savings in 2026 will be reinvested in sales and marketing and bonus accruals, so no direct margin benefit is expected this year, but margin expansion remains a long-term goal.

“So in the second half of the year at this point, we are expecting to continue to invest in sales and marketing as we've been doing in the first half of the year. We also will have some increase on our bonus accruals that I mentioned.”

asked by George Michael Kurosawa · answered by Linda Pinne

How do AI agents drive significant operational improvements, and what is their impact on labor cost reductions?

AI agents primarily address the small percentage of exceptions (e.g., damaged inventory, wrong location) that cause significant disruption in warehouses, resolving them in real-time and allowing operators to focus. While labor cost reductions and overtime reductions are seen and measurable, the larger value often comes from resolving these exceptions and improving overall efficiency across multiple facilities.

“But what we've clearly heard from our customers is the bigger value that they're seeing is some of these big percent changes, right? Short picks and changes, exceptions, et cetera, because those are things that really add up when you're talking about across multiple warehouses around the country, around the world, there's real major dollar value impact in those that are most often even bigger savings than the labor savings they see, just sometimes not as easy to calculate.”

asked by Guy Drummond Hardwick · answered by Eric Clark

What is the impact of macro volatility on customer investments, and are renewals tracked on a logo or dollar basis?

Despite persistent macro volatility, customers continue to invest in solutions that create value, leading to strong bookings. Renewals are tracked on a dollar basis and are currently in line with the full-year plan, contributing to the overall RPO growth target.

“I think our customers are anticipating the volatility. They acknowledge it, but they're not getting distracted by it.”

asked by J. Lane · answered by Eric Clark

What are the trends in WMS renewals regarding retention, pricing, and competition, and how will 'Editions' affect the services business over time?

WMS renewals experience zero competitive intensity, with focus on price increases and cross-sell/upsell opportunities. The 'Editions' initiative is expected to expand deal volume, thereby creating more services opportunities, particularly by enabling the sale of the Active platform to segments previously served by older products or those with simpler needs.

“So ultimately, it's creating more deals, more volume, more services opportunity.”

asked by Mark Schappel · answered by Eric Clark